In a move that could further increase electricity prices but inflate coffers of the mineral rich States like Tamil Nadu, Madhya Pradesh, Jharkhand, Chhattisgarh and Andhra Pradesh, the Cabinet Committee on Economic Affairs (CCEA) on Thursday approved new royalty rates for coal and lignite.
The states are likely to benefit to the tune of Rs. 1050 crore according to an official estimate by the increase in royalty prices. “The CCEA approved the proposal for adoption of ad-valorem regime, in place of the present hybrid formula, for charging royalty on coal and lignite at the rate of 14 per cent and six per cent respectively,” an official statement issued after the CCEA meeting headed by Prime Minister, Manmohan Singh stated.
“The major coal producing states will now earn revenue of about Rs. 6,980 crore in place of Rs. 5,950 crore, being earned at present at existing rates, resulting increased combined earning by more than Rs. 1,050 crore,” the statement said. Royalty for both the minerals is now calculated through a formula consisting of ad-valorem plus a fixed component, which depends on the grade of coal. Under the new ad valorem formula charging royalty on coal and lignite will be at the rate of 14 and 6 per cent respectively, as per the recommendations of the Study Group, constituted by Ministry of Coal for revision of royalty rates on coal and lignite.
The statement said the proposed royalty revision not to be extended to the State of West Bengal unless the cesses imposed, are withdrawn. For States other than West Bengal that levy cess or other taxes specific coal bearing lands, the revision of royalty allowed shall be adjusted for the local cesses or such taxes so as to limit overall revenue to the ad-valorem royalty yield. For the purpose of calculating the royalty for captive coal mines, the price of coal produced from captive coal mines shall mean the basic pithead price of Run of Mine (ROM) coal and lignite, as reflected in the invoices, excluding taxes, levies and other charges of Coal India Limited (CIL).
The implementation of above revised rates of royalty on coal and lignite would provide coal and lignite bearing States reasonable share of the income earned by mining, production and selling of these minerals.
As per the estimates, the royalty revenue earning of major coal producing States -- Jharkhand, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Orissa, Nagaland, Meghalaya, Maharashtra, Chhattisgarh, Assam and Arunachal Pradesh would increase on an average up to 17.31 per cent for coal and 14.53 per cent for lignite.
